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Tax regulations. Commentary

Controversial questions of tax proceedings

Useful advice

On 1.1.2011 the law #280/2009 Sb. concerning tax regulations was put into effect. These few paragraphs briefly outline the foundational changes that were put into effect by this law. The importance of these lines is mainly in that the saying “he who is prepared isn’t surprised” will apply now more than ever.

Tax regulations are known as the modern legal enactment anchoring principles of good administration in things of tax administration, i.e., the understanding that public administration is a service for the public. Tax regulations should initiate a client-centered approach, where the tax subject will be in the position of beneficiary, to whom the tax administrator will provide service and at the same time be careful that the beneficiary is maximally satisfied. Time will show whether the above-mentioned will actually apply in life or if it is only a matter of assertion. However for now we can say that the tax regulations are a legal enactment that is tailor-made for tax administrators. On one hand tax regulations anchor rights and obligations which were up to this point only observable from established judicial decisions, and which were hard to find by tax subjects in legal enactments. On the other hand, tax regulations with their provisions remove unpleasant findings of tax courts where those findings were excessively detrimental for tax administrators. For example, a foundational change is connected with the deadline for tax assessment. In the past this deadline quite fulfilled its role as motivation for tax administrators to be active (according to the deadline a tax administrator was required to assess the tax in accordance with the law, with the penalty of nonconformance being forfeiture of the right to assess the tax). Tax regulations very much abridged, if not completely eliminated, the mission of this deadline by all kinds of discontinuities and adjustments. Furthermore one can point to the stricter conditions for submission of additional tax statements, or the practical eradication of the possibility to request remission of taxes.

The main problem of tax regulations can be seen in that it comes down to the strengthening of the power of tax administrators. Of course they will not hesitate and will take advantage of all their powers without leaving anything behind. Evidently the time is ending, when tax subjects, same as a large number of tax advisors and bookkeepers, were able to defend themselves on their own. It is especially the situation when the majority of problems are most easily resolved only in the initial stage of the matter. If we combine this reality with the fact that even tax administrators in the first months up to years after the law takes effect will not be sure of their standing, then institutions of tax lawyers will become much more important and essential than in the past.

It can be summed up that in the year 2011 there was quite a fundamental change in tax administration. While administrators received in hand a means which they had long desired, the people who stand on the other side of the barricades once again have a smaller place where they can functionally defend the encroachment into their rights. Tax subjects should not leave anything to chance. They should obtain more detailed information about tax regulations before the tax officer knocks on their door. Luckily there is quite a lot of literature about tax regulations; hence there is something to choose from.